Summary: H.R.675 — 104th Congress (1995-1996)All Information (Except Text)

There is one summary for H.R.675. Bill summaries are authored by CRS.

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Introduced in House (01/25/1995)

Securities Litigation Equity Act of 1995 - Amends the Securities Exchange Act of 1934 (the Act) to prohibit brokers, dealers, or associated persons from soliciting or accepting referral fees from an attorney for obtaining the representation of a customer in any implied private action.

(Sec. 2) Prohibits, unless otherwise ordered by the court, the use of funds disgorged solely as the result of any administrative or court action brought by the Securities and Exchange Commission (SEC) to pay legal expenses incurred by private parties seeking distribution of such funds.

Modifies the guidelines for class action litigation, including: (1) recovery by named plaintiffs in the same manner as all other members of the class; (2) court determination of conflicts of interest on the part of counsel with a beneficial interest in the securities that are the subject of the litigation; (3) restrictions on settlements under seal; (4) restrictions on payment of attorney's fees from settlement funds; (5) disclosure of settlement terms to class members; and (6) special verdicts.

(Sec. 3) Establishes a statute of limitations period for implied private rights of action.

(Sec. 4) Provides for a court-appointed guardian ad litem or class action steering committee to oversee counsel and settlement offers for the plaintiff class.

(Sec. 5) Delineates the requirements for securities fraud actions.

(Sec. 6) Modifies the allocation of damages scheme to distinguish between primary degrees of responsibility and the application of proportionate liability.

(Sec.7) Directs the SEC to re-examine the regulatory and judicial framework with respect to predictive statements ("forward-looking statements") concerning the future economic performance of an issuer of securities.

Amends the Securities Exchange Act of 1934 to prescribe litigation procedures with respect to safe harbors for forward-looking statements.

(Sec. 8) Modifies requirements for audits conducted by an independent public accountant of an issuer's financial statements to include procedures to: (1) detect illegal acts; (2) identify related party transactions material to financial statements; and (3) evaluate an issuer's ability to continue as a going concern. Sets forth notification and reporting guidelines for a public accountant who detects illegal activities during the course of an audit. Limits such auditor's liability for complying with such guidelines. Establishes civil penalties for an auditor's noncompliance with this Act.

(Sec. 9) Amends the Racketeer Influenced and Corrupt Organizations statute to exclude from its purview a civil action if the racketeering activity in question involves fraud in the sale of securities.